By Jake Maxwell Watts and P.R. Venkat. Published on 1 December 2016 by The Wall Street Journal.
Singapore authorities announced sanctions on Goldman Sachs Group’s former top executive in Southeast Asia on Friday after the banker allegedly wrote an unauthorized reference letter for a Malaysian who U.S. authorities believe is at the center of one of the world’s largest-ever financial scandals.
Goldman put the banker, Tim Leissner, its former chairman of Southeast Asia, on leave at the start of this year after it discovered he had written the reference letter on behalf of Jho Low, the young Malaysian financier who U.S. authorities have named as a key figurein the scandal revolving around Malaysian state investment fund 1MDB.
The Monetary Authority of Singapore, in a statement, said it had decided to ban Mr. Leissner from working in the city state’s financial markets for 10 years. It said the former Goldman banker had written the letter to a Luxembourg financial institution claiming that Goldman had done due diligence on Mr. Low and had not found any concerns of money laundering. “These statements were untrue and were made by Mr. Leissner without Goldman Sachs’ knowledge or consent,” the statement said. The U.S. Department of Justice in a lawsuit earlier this year alleged that more than $3 billion had been siphoned out of the fund, 1Malaysia Development Bhd., and gone into real estate, Hollywood movies and other assets. The suit said Mr. Low had benefited from some of the stolen money.
The MAS also said it had levied million-dollar fines on the local branches of Standard Chartered Ltd. and private bank Coutts & Co Ltd. for their handling of accounts related to the 1MDB scandal. It fined Standard Chartered S$5.2 million ($3.6 million), and imposed a fine of S$2.4 million on Coutts.
Attempts to reach Mr. Leissner, who is living in Los Angeles, were not immediately successful. He has denied wrongdoing. Goldman Sachs said in a statement Friday that the MAS action against Mr. Leissner was related to a matter discovered in January 2016 that it reported to Singapore authorities. The bank added that it is cooperating with authorities. Attempts to reach Mr. Low, whose whereabouts is unknown, were unsuccessful.
Standard Chartered said in a statement it regrets that 1MDB-related transactions passed through the bank. It said it had reported the suspicious transactions, cooperated with authorities and had taken action to strengthen its controls.
A spokesperson for Coutts could not immediately be reached for comment.
Write to Jake Maxwell Watts at jake.watts@wsj.com and P.R. Venkat at venkat.pr@wsj.com
By Chanyaporn Chanjaroen.
Published on 1 December 2016 by Bloomberg.
Singapore plans to bar former Goldman Sachs
Group Inc. banker Tim Leissner from its securities industry for 10 years and
fined Standard Chartered Plc and Coutts & Co. over breaches related to
a scandal-plagued Malaysian sovereign fund.
Leissner,
who left Goldman Sachs in February, was sanctioned because he issued an
unauthorized reference letter on behalf of Low Taek Jho, the Monetary
Authority of Singapore said in a statement on Friday. Low, a Malaysian
financier, has been linked to alleged efforts to siphon billions of dollars
from 1Malaysia Development Bhd.
The
penalties are the latest the MAS has handed down to address the damage to
Singapore’s reputation caused by anti-money laundering lapses linked to 1MDB.
The regulator withdrew the banking licenses of Falcon Private Bank and BSI SA’s
local units earlier this year and fined UBS Group AG and DBS Group Holdings
Ltd. a combined total of S$2.3 million ($1.6 million).
“These
actions send a strong signal that we will not tolerate the abuse of Singapore’s
financial system for illicit purposes,” MAS Managing Director Ravi Menon said
in the statement. “The supervisory investigations into the intricate web of
international fund flows has been a learning experience for financial
institutions as well as for MAS. Our financial sector will emerge cleaner and
stronger.”
Leissner’s Letter
Global Probes
Global Probes
Besides
serving notice of its intention to issue a so-called prohibition order against Leissner,
the MAS fined Standard Chartered S$5.2 million and Coutts S$2.4 million.
The
proposed order will prohibit Leissner from performing any activity regulated by
the city’s securities laws or taking part in the management of any
capital-market services firm in Singapore, the MAS said.
The
letter Leissner issued on behalf of Low was on Goldman Sachs’s letterhead and
stated that the firm had found no money-laundering concerns after conducting
due diligence on Low and his family, the MAS said. The statements were
untrue and were made by Leissner without his New York-based employer’s
knowledge or consent, the regulator said.
“Today’s
announcement refers to a matter we discovered in January of this year and
identified as a clear violation of the firm’s standards,” Goldman Sachs said in
an e-mailed statement. “At that time we promptly took steps to separate Mr.
Leissner from the firm and reported the matter to regulatory authorities in
several jurisdictions, including Singapore. We continue to cooperate with the
MAS.”
The
regulator said it’s nearing completion of its examinations of financial
institutions in Singapore through which 1MDB-related fund flows took place, and
will provide a final update in early 2017. The city-state has charged four people,
including three former BSI bankers, for their roles in transactions and money
flows linked to 1MDB.
Allegations that
billions of dollars have been improperly siphoned out of the Malaysian fund has
led to investigations across the globe including by Swiss and U.S. authorities.
The U.S. Department of Justice said in July that more than $3.5 billion was misappropriated from
1MDB, as the agency sought to seize about $1 billion of assets it claims was
laundered through the U.S. banking system.
Five
wire transfers totaling $636 million were sent between May and December 2012
from a bank account of a company registered in the British Virgin Islands to an
account at Standard Chartered Bank in Singapore held in the name of Blackstone
Asia Real Estate Partners, the DOJ alleged in a suit filed on July 20. The
Blackstone account, not related to Blackstone Group LP, was controlled by a man
named by the DOJ as a “a close associate” of Low.
Standard
Chartered said it reported the transactions “both before and at the time we
exited the accounts in early 2013,” according to an e-mail statement from the
bank. “We have made significant investments in strengthening our controls,
processes, and surveillance systems, and continue to do so.”
1MDB
has consistently denied wrongdoing and Malaysia’s government has said it will
cooperate with lawful investigations of local companies or its citizens in
relation to the fund.
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